State Bank Of Bikaner And Jaipur vs S. Ponnusamy & Anr

Challenge in this Revision Petition filed by the Petitioner/Opposite Party No.2 in the Complaint, u/s 21(b) of the Consumer Protection Act 1986 (hereinafter to be referred to as “the Act”) is to the Order dated 10.12.2015 passed by the State Consumer Disputes Redressal Commission, Tamil Nadu at Chennai (hereinafter to be referred to as “the State Commission”) in First Appeal No. 562/2012.  By the Impugned Order, the State Commission while affirming the Order dated 16.04.2012 passed by the District Consumer Disputes Redressal Forum, Coimbatore (hereinafter to be referred to as “the District Forum”) in Consumer Complaint No. 227 of 2011 has dismissed the appeal filed by the Petitioner. The District Forum allowing the complaint filed by the Complainant/ Respondent No.1 herein had directed the Petitioner, State Bank of Bikaner and Jaipur (hereinafter to be referred to as the “Petitioner Bank”) to pay a sum of ₹13,28,830/- to the Complainant towards the loss and damage suffered on account of fire accident along with ₹50,000/- as compensation for mental agony. The Complaint was dismissed qua the Opposite Party No.1, i.e National Insurance Company Ltd. (hereinafter to be referred to as the “Insurance Company”)

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Succinctly put the facts of the case as narrated in the Complaint are that the Complainant had availed of Credit Facilities from the Petitioner Bank in the year 2004 and soon after the Petitioner Bank had taken a Fire Insurance Policy from the Opposite Party No.1 Insurance Company on behalf of the Complainant covering the risk to the plant, machinery and stock lying at the Complainant’s premises at D. No. 582/1, Karuppagoundanpalayam, Opp. Tamil Nadu Theatre, Tirupur. Subsequently, in the year 2006, the Complainant shifted their factory/manufacturing Unit and place of business to S.F. No.730/1, Navithan Thottam, Thennampalayam East, Tirupur – 641 604 which was duly informed to the Petitioner Bank by the Complainant and the Petitioner Bank continuously got renewed the policy on payment of the necessary premium to the Insurance Company.

During the currency of the Policy, on 24.06.2009, a fire broke out at 7:30 a.m. in the Complainant’s factory and the accident was informed to the Insurance Company by the Complainant on the same very day. Upon intimation, the Insurance Company appointed a Surveyor to assess the loss suffered by the Complainant due to fire accident. The Surveyor visited the site and assessed the loss.  Though the Complainant suffered the loss to the tune of ₹30,00,000/- but consented to receive only ₹16,00,000/-. However, vide letter dated 12.07.2010, the Insurance Company repudiated the claim of the Complainant on the ground that the insurance was taken covering the plant, machinery and stocks lying at 582/1, Karuppagoundanpalayam, Opp. Tirupur and the fire accident occurred at Navithan Thotam Tirupur which was not covered under the policy. Feeling aggrieved, the Complainant filed the Complaint before the District Forum.

The Complaint was contested by the Petitioner Bank on the ground that the information regarding change in address of the factory premises of the Complainant from D. No. 582/1, Karuppagoundanpalayam, Opp. Tamil Nadu Theatre, Tirupur to S.F. No.730/1, Navithan Thottam, Thennampalayam East, Tirupur – 641 604 was duly received by them and the same was also intimated to the Insurance Company. The Insurance Company visited the new premises and after inspection and due verification of the stocks and raw materials lying therein issued the policy. After the fire accident, the Insurance Company has sold the entire salvage but later on had refused to make the payment of the claim amount with malafide intention. The Insurance Company was well aware of the new address as only after carrying out the inspection of the stock, they were issuing the policy.

The Insurance Company resisted the Complaint by filing its Written Version and stating that the intimation regarding change in address in the factory premises of the Complainant was not given to them and as such the claim under the policy was not payable as held by the Hon’ble Supreme Court in catena of judgments.

After hearing both the parties and going through the material and evidence available on record, the District Forum allowed the Complaint by observing as under:-

“ Hence, the Bank ought to have intimated the insurance and got endorsement in the insurance policy covering the stocks kept in the above address of the complainant. There is nothing on record to show that the Bank intimated the insurer in the manner expected of it.

Though the bank has stated in his written version that it has intimated the change of address of the complainant's premises he has not produced any letter or correspondence evidencing the above facts. Hence, we are unable to accept the Bank's version that it has intimated the insurance company and the Insurer is bound to honour the claim of the complainant.

After the complainant's notice dt. 6.7.11 (Ex.A7) the Bank has requested the insurer to arrange for the payment of claim stating that due to clerical error the policy cover address mentioned is different from the actual address. In the above letter, the bank has stated as below:-

" We are in receipt of legal letter from the firm claiming the loss of stock on account of fire to the stock. It has been learnt that in the insurance policy cover address mentioned is different from what it is actually, due to clerical error occurred over the period of time.

However, as per our inspection record, (copy enclosed for your necessary action) it clearly states that the stocks are hold at SF No.730/1, Navithan Thottam, Thennampalayam, Tirupur 641 604. Therefore, given claim of firm is genuine, so you are requested to arrange for payment of claim as requested by them...".

For the above clerical error committed by the Bank and its officials, the complainant cannot be expected to suffer the loss as the insurance company has repudiated the claim on the ground that the premises where the stock was held was a different one than the one covered under the policy.

Along with the above letter, a copy of the inspection record of the bank has been enclosed. Relying on it an argument was put forth by the learned counsel for the bank that as per the inspection record of the bank, the stocks are held at the new premises of the complainant where the fire took place and the insurer was well aware of it. Those documents, in no way, show that the bank has intimated the change of address of the complainant's premises holding the stock to the new place where the fire accident had taken place.

From the above, it stands established that the Bank has committed deficiency in service by failing to intimate the insurer about the change of location of the property of the complainant knowing fully well that the complainant has shifted his (insured) stocks etc. to a new address ultimately leading to loss to the complainant as the insurer has repudiated the claim since the bank has not intimated the change of address and got necessary endorsement made in the insurance policy in this regard. The repudiations of the claim by the Insurance Company is justified as the premises where the stocks of the complainant were stored is not covered by the Policy of Insurance and there is violation of "Agreed Bank Clause" Bank contained in the terms and conditions of the Insurance Policy, by the Bank.

For the aforesaid reasons, we hold that the bank has committed deficiency in service and the complainant is entitled to have the loss compensated by the bank since it has happened only due to the Bank’s negligence.”

Dis-satisfied with the aforesaid Order, Petitioner Bank preferred First Appeal No. 562/2012 before the State Commission which was dismissed upholding the Order passed by the District Forum. The State Commission observed as under:-

“   It is pertinent to note that in Ex.B7, which is the letter addressed by the 2nd opposite party bank to the 1st opposite party it has been stated that the new address / location of the new factory was recorded in their records and the same was not reported to the 1st opposite party due to clerical error occurred over a period of time.

It is quite significant to note that on one side, the 2nd opposite party bank/appellant would contend in their version that the intimation regarding the change of location/ shifting the factory from the previous address was duly received by them from the complainant, and it was recorded in their office registers, and the same was conveyed to the 1st opposite party and intimation was sent to the 1st opposite party. On the other side, as noted in Ex.B7, the 2nd opposite party/appellant has stated that intimation was not sent to the 1st opposite party due to clerical error in their office.

We find no materials on record to substantiate that the 2nd opposite party/appellant conveyed the change of address/ location of the complainant’s factory premises to the new place, and therefore the contention of the 2nd opposite party/ appellant that intimation was duly conveyed/reported to the 1st opposite party is untenable.

The further contention of the 2nd opposite party/ appellant is that as stated in Ex.B7, the failure to report the fire accident to the 1st opposite party is a clerical error. This goes to establish the deficiency in service on the part of the 2nd opposite party.

On considering the entire materials on record, we hold that there is deficiency in service on the part of the 2nd opposite party/appellant, and they are liable to compensate the complainant against the loss due to the fire accident.

The District Forum has assessed the complainant’s loss in fire accident at Rs.14,18,638/- as assessed by the Surveyor’s report, vide Ex.B5, and has deducted the sale proceeds of the salvage of Rs.79,807/- received directly by the complainant, and further deducting the policy excess of Rs.10,000/- and assessed the net loss at Rs.13,28, 831/-; and the District Forum has awarded a sum of Rs.50,000/- towards compensation for mental agony etc. The quantum of loss worked out by the District Forum and the award of compensation are quite just and reasonable. There is no infirmity in the order of the District Forum and we agree with the decision of the District Forum and the order does not warrant interference of this Commission.

There is no merit in the appeal, and the appeal is liable to be dismissed.”

Hence, the Petitioner Bank is before us.

Heard the Learned Counsels for the Parties at some length and also perused the material facts as well as evidence available on record.

The question which falls for our consideration is as to whether the Petitioner Bank has intimated about the change in factory address of the Complainant to the Insurance Company or not?

The undisputed facts of the case are that the Complainant had obtained credit facilities from the Petitioner Bank during the year 2004. After releasing the credit facility, the Petitioner Bank had taken a Fire Insurance Policy No. 651400/46/7500001 from the Insurance Company covering the fire risk to the Plant, Machinery and Stocks stored at manufacturing unit/business premises of the Complainant at Door No. 582/1, Karuppagoundanpalayam, Opp. Tamil Nadu Theatre, Tirupur – 638602. The Complainant had shifted his business premises to S.F. No.730/1, Navithan Thottam, Thennampalayam East, Tirupur – 641 604.  The change of address in the business premises was duly informed by the Complainant to the Petitioner Bank and the Petitioner Bank while granting permission to avail of cash credit and term loan to the Complainant addressed the sanctioned letter dated 29.12.2006 to the Complainant at the new address only. The Petitioner Bank was getting renewed the policy from the Insurance Company since the year 2004.  During the validity of the policy, on 24.06.2009 at 7.30 a.m. a fire took place at the business premises/manufacturing unit of the Complainant which resulted in huge damaged to the stock. Upon intimation, the Insurance Company appointed the Surveyor who assessed the loss. The Complainant restricted his claim to ₹16,00,000/- and gave his consent for the said payment. However, vide letter dated 12.07.2010, the Insurance Company repudiated the claim on the ground that the policy was taken for covering the plant and machinery and stocks situated at 582/1, Karuppagoundenpalayam, Opp. To Tamil Nadu Theatre, Tirupur and the fire accident has occurred at Navithan Thottam, Velliakadu, Tirupur.  Since the location of the fire damage was different from the location covered under the policy in question, the claim was not payable. There is no denial from the Petitioner Bank that they were duly intimated about the change in address in the business premises by the Complainant. In their Written Version filed before the District Forum, it had been specifically admitted by the Petitioner Bank that the change in address was duly reported to them by the Complainant and it was noted down in their record. However, they had taken the defence that the change in address in business premises was duly informed to the Insurance Company and there was a clerical error on the part of the Insurance Company in mentioning old insured premises on the policy. On the contrary, it is the stand of the Insurance Company that no information was furnished by the Petitioner Bank to them about change in address of the insured premises. Even otherwise, as per terms and conditions of the Policy, the Bank was under an obligation to get endorsement on the policy with regard to change of the insured premises which obligation they had failed to discharge. On scrutiny of the record, we do not find any cogent evidence wherein the Bank had intimated the Insurance Company about the change of address of the business premises of the Complainant. There is also concurrent finding of facts recorded by the fora below that the Petitioner Bank had failed to adduce any proof showing that the Insurance Company was informed about the change in insured premises and as such the claim was not payable by the Insurance Company. This Commission in the case of Jai Ambey Trading Co. Vs. National Insurance Co. Ltd. – I (2018) CPJ 296 (NC)  has held as under:-

“  Admittedly, the insurer as well as the insured are based at the same place i.e. Kota in Rajasthan.  Therefore, in the normal course of conduct the insured if he had to seek change in godown in the insurance policy taken by him, would deliver a letter by hand and obtain an acknowledgement from the insurer.  Neither that was done, nor has the complainant given any explanation for not adopting the said course of action.  In any case, such a vital information, in the normal course of business would atleast be conveyed by Registered Post so as to have an authentic proof of information having been delivered to the insurer.  Admittedly, the alleged information was not even sent by Registered Post.

In any case, even if it is assumed that the intimation was sent under Certificate of Posting, the petitioner / complainant could not have sat silent on sending the information and ought to have pursued the matter with the insurer for making the requisite endorsement in the insurance policy taken by it.  In the absence of such an endorsement, the insurer would not be liable to reimburse the insured for the goods shifted from one godown to other godown.  As stated in the reply filed by the insurer, had the complainant communicated the change of location to them, they would have inspected the changed location so as to find out whether the place was suitable to cover the risk of fire and damage to the insured goods or not.  No such opportunity was given by the complainant to the insurer.”

We are of the considered opinion that the conclusion arrived at by the Fora below is based on due appreciation of the facts of the case and the evidence adduced by the parties and it does not call for any interference from us under limited Revisional Jurisdiction u/s 21 of the Act.

Even otherwise, it is well settled by the Hon’ble Supreme Court of India in ‘Sunil Kumar Maity vs. State Bank of India & Anr.’ [Civil Appeal No. 432 / 2022 Order dated 21.01.2022] that the Revisional Jurisdiction of this Commission under Section 21(b) of the Consumer Protection Act, 1986 is extremely limited and this Commission cannot set aside the Orders passed by the Fora Below in Revisional Jurisdiction until and unless there is any illegality, material irregularity or jurisdictional error in the Orders.  The relevant paragraph of the said judgment is quoted as under:-

“9.  It is needless to say that the revisional jurisdiction of the National Commission under Section 21(b) of the said Act is extremely limited. It should be exercised only in case as contemplated within the parameters specified in the said provision, namely when it appears to the National Commission that the State Commission had exercised a jurisdiction not vested in it by law, or had failed to exercise jurisdiction so vested, or had acted in the exercise of its jurisdiction illegally or with material irregularity. In the instant case, the National Commission itself had exceeded its revisional jurisdiction by calling for the report from the respondent-bank and solely relying upon such report, had come to the conclusion that the two fora below had erred in not undertaking the requisite in-depth appraisal of the case that was required. .....”

Recently, the Hon’ble Apex Court in the case of “Rajiv Shukla vs. Gold Rush Sales and Services Ltd. and Ors. - (2022) 9 SCC 31  while affirming its earlier view taken in the case of “Rubi (Chandra) Dutta Vs. United India Insurance Company – (2011) 11 SCC 269  that the National Commission has no right to interfere with the concurrent finding of facts of the Fora below in its Revisional Jurisdiction, has held as under:-

“  At this stage, it is required to be noted that on appreciation of evidence on record the District Forum as well as the State Commission concurrently found that the car delivered was used car. Such findings of facts recorded by the District Forum and the State Commission were not required to be interfered by the National Commission in exercise of the revisional jurisdiction. It is required to be noted that while passing the impugned judgment and order the National Commission was exercising the revisional jurisdiction vested under Section 21 of the Consumer Protection Act, 1986. As per Section 21(b) the National Commission shall have jurisdiction to call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by any State Commission where it appears to the National Commission that such State Commission has exercised its jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity. Thus, the powers of the National Commission are very limited. Only in a case where it is found that the State Commission has exercised its jurisdiction not vested in it by law, or has failed to exercise the jurisdiction so vested illegally or with material irregularity, the National Commission would be justified in exercising the revisional jurisdiction. In exercising of revisional jurisdiction the National Commission has no jurisdiction to interfere with the concurrent findings recorded by the District Forum and the State Commission which are on appreciation of evidence on record. Therefore, while passing the impugned judgment and order the National Commission has acted beyond the scope and ambit of the revisional jurisdiction conferred under Section 21(b) of the Consumer Protection Act.”

In view of the law laid down by the Hon’ble Supreme Court in afore-noted Judgments, we do not find any good ground to interfere with the well-reasoned Orders passed by the Fora below in Revisional Jurisdiction u/s 21 (b) of the Act.  Consequently, the present Revision Petition fails and is hereby dismissed.  Keeping in view the facts and circumstances of the case, there shall be no Order as to costs.

Before parting with the matter, it is made clear that if any amount is deposited either before the District Forum or the State Commission as pre-condition to stay, the same shall be released in favour of the Complainant immediately with accrued interest and the balance amount in terms of the Orders passed by the District Forum shall be paid within a period of eight weeks from the date of passing of the order.